Asia Pacific Factoring Services Market Size, Share & Trends Analysis Report By Category (Domestic, International), By Type (Recourse, Non-Recourse), By Financial Institution, By End-use, And Segment Forecasts, 2024 - 2030

Market Size & Trends

The Asia Pacific factoring services market size was estimated at USD 1,082.65 billion in 2023 and is expected to grow at a CAGR of 11.9% from 2024 to 2030. The rise in SMEs, e-commerce expansion, increasing international trade, and digitalization of financial services drive the growth of factoring services in the region. Factoring services allow businesses to sell invoices to a third party to meet immediate capital requirements. These services bridge the gap between delayed customer payments and immediate operational needs. Defaulting customers can significantly disrupt MSME’s financial well-being. Factoring services transfer this risk to the factoring company, providing a crucial safety net against bad debts.

Rapid innovations in technology, such as artificial intelligence (AI), machine learning (ML), and blockchain, are used for creating applications for factoring service solutions for risk management, credit scoring, automated decision-making, enhancing transparency in transactions, and providing secure cross-border transactions. Integrating technology in the factoring industry through platforms that offer automated and online factoring services has made it easier, faster, and cost-effective for businesses to access these services.

Companies rely more on factoring services to ensure liquidity and maintain operations during financial crises. Factoring companies are expanding their service offerings, such as invoice management, collection services, and supply chain financing, to cater to a broader range of clients. Specific sectors with longer payment cycles, such as manufacturing, textiles, and logistics, have shown increased demand for factoring services to bridge the gap between invoicing and payment receipts.

Market Concentration & Characteristics

The industry's growth stage is high and the pace of its growth is accelerating. A growing emphasis on global trade and the need for businesses to manage cash flows have increased the demand for factoring services. Asia Pacific has diverse economies from emerging markets like India and Indonesia.

The market is significantly fragmented, featuring several global and regional players. The degree of innovation is high as factoring companies keep updating their platforms to integrate new technologies, such as AI, ML, blockchain technology, and data analytics, to improve end-user applications and make them secure for businesses. The impact of regulation on factoring services is higher, especially on NBFC factoring companies, as they operate differently and specialize in specific industries compared to the banks. They must meet stricter norms for risk management, transparency, and fair-trade practices. The end-user concentration is high as factoring services are used in various sectors like healthcare, manufacturing, IT & telecom, and others.

Category Insights

Based on category, the domestic segment led the market with the largest revenue share of 72.4% in 2023 and is expected to grow at a steady pace over the forecast period. The growth of e-commerce, SME needs for financing, and technological advancements in factoring services drive the demand for domestic factoring services. Domestic factoring services offer efficient ways of managing cash flows, reducing risks of bad debts, and better-managing accounts receivable, freeing up business time and resources. Adopting new technologies, such as online platforms, digital invoicing, and automated risk assessment tools, has streamlined the factoring process and reduced costs.

The international segment is anticipated to witness the fastest CAGR during the forecast period. The increasing need for credit protection, technological advancement in cross-border payments, and tailored financial solutions for supply chain management (SCM) are expected to drive segment growth. International factoring services offer tailored financial solutions to businesses managing multiple global suppliers & customers and credit protection against the risk of non-payment by foreign buyers. International factoring companies use blockchain technology for secure and transparent transactions in cross-border payments.

Type Insights

The recourse type segment held the largest revenue share in 2023. The growth of SMEs and the rise in international exports in Asia Pacific fuel the demand for resource factoring services. Recourse factoring offers flexibility in financing options and immediate availability of cash flow by converting accounts receivable into working capital. Recourse factoring provides ease of business operations to the businesses.

The non-recourse segment is anticipated to grow at the fastest CAGR from 2024 to 2030. The high demand for import and export activities, supply chain financing, and growing financing needs of SMEs are expected to drive the segment growth. Non-recourse factoring offers alternative financing solutions to SMEs without the need for traditional collateral, and these financial solutions help improve cash flows for SMEs. These services also offer risk mitigation to businesses associated with cross-border transactions.

Financial Institutions Insights

The bank segment held the largest revenue share in 2023. The increasing e-commerce and high demand for secured financing options drive the segment growth. Banks offer competitive rates, immediate access to cash, supply chain financing, and ease & speed of business transactions. With the increasing global trade, companies have shifted to banks for secured financing solutions. In addition, with the growing number of cyber-attacks, banks are investing in new technologies, such as AI & ML for risk assessment & mitigation and blockchain technology to offer more secure cross-border transactions.

The non-banking financial institutions (NBFIs) segment is expected to grow significantly over the forecast period. The increasing need for flexible financing solutions and technology integration in financial services is expected to drive the segment's growth. NBFIs provide factoring services tailored to the specific needs of businesses. NBFIs offer factoring services customized to the region's unique business practices and cultural norms, making it easier for companies to access financing. NBFIs can provide factoring services supported by advanced technologies, such as ML, natural language processing (NLP), and AI. These technologies help NBFIs assess credit risk more accurately, streamline the factoring process, and provide more efficient and responsive customer service.

End-use Insights

The manufacturing end-use segment held the largest market share in 2023. Increasing demand for working capital requirements, export factoring solutions, and risk mitigation drive the segment's growth. Factoring services offer manufacturing industries quick access to working capital, credit protection against buyer default, and risk mitigation, such as buyer insolvency. Export factoring solutions help manufacturers get faster payments by assuming the credit risk of overseas buyers.

The healthcare segment is expected to grow rapidly over the forecast period on account of the rising demand for advanced medical treatments. The increasing costs of medical treatments & outpatient care and delayed payment in medical insurance have increased the demand for factoring services. Factoring companies offer quick access to cash flows to purchase hospital supplies and mitigate the risks of delayed or denied insurance claims.

Country Insights

China Factoring Services Market Trends

The factoring services market in China held the largest share of 49.6% of the overall revenue of the APAC market in 2023. The increasing demand for alternative financing of SMEs, e-commerce growth, and the rise of fintech firms are driving the growth for factoring services in the country. China is one of the major hubs for global trade, with companies from various sectors exporting and importing goods. Factoring companies help businesses secure cross-border transactions. Fintech companies, such as Ant Group, offer platforms to cater to the financial needs of SMEs in the country. The company offers digital finance platforms, such as MYbank and Ant Fortune, to manage wealth and meet instant capital requirements for SMEs.

India Factoring Services Market Trends

The India factoring services market is expected to grow at the fastest from 2024 to 2030. Rising awareness of factoring services, increased focus on SME growth, and technological advancements in fintech applications are expected to drive market growth in the country. Fintech companies are making it easier for businesses to learn about factoring services on their platforms. They offer information regarding factoring companies, service offerings, and eligibility criteria, encouraging firms to consider factoring services. Technology advancements, such as the integration of AI and blockchain, streamline the transaction process by automating tasks, such as credit risk assessment and invoice verification, and enhancing transparency and security in transactions. Government schemes, such as the Emergency Credit Line Guarantee Scheme, offer SMEs access to working capital from various financial institutions, uplifting SMEs' growth.

Key Asia Pacific Factoring Services Company Insights

Some of the key players operating in the market include Mizuho Financial Group and the Industrial and Commercial Bank of China (ICBC).

• Mizuho Financial Group provides a wide array of financial products and services. The group includes Mizuho Bank Ltd., Mizuho Trust & Banking Co., Ltd., and Mizuho Securities Co., Ltd. Its services cater to a diverse clientele, including individuals, small- and medium-sized enterprises (SMEs), large corporations, financial institutions, and public sector entities

• Industrial and Commercial Bank of China (ICBC) stands as one of the largest and most prominent banks globally in terms of total assets and market capitalization. ICBC operates an extensive network of branches and has a significant international presence, catering to individuals, businesses, and government entities

Recent Developments

• In March 2024, SBI Global Factors announced a partnership with Cashinvoice to ease SMEs' working capital requirements. The company aims to expand the use of factoring solutions to foster SMEs' growth in India

• In August 2023, the Export-Import Bank of India announced the launch of its new subsidiary, India Exim Finserve, for import and export factoring services. The company aims to provide Indian SMEs with customized financial solutions, allowing them to expand their businesses overseas

• In October 2023, DBS announced the launch of Eco Renovate Loan, an innovative financing solution for SMEs. The new solution aims to promote SMEs' adoption of green and sustainable business practices

• In January 2022, The Reserve Bank of India announced revised factoring norms to allow many new firms to enter the factoring services business. The new norms aim to increase the number of factoring companies in the country to support the growth of small and medium enterprises

Asia Pacific Factoring Services Market Report Scope 

Asia Pacific Factoring Services Market Report Segmentation

This report forecasts revenue growth at regional and country levels and provides an analysis of the latest trends in each of the sub-segments from 2017 to 2030. For this report, Grand View Research has segmented the Asia Pacific factoring servicesmarket report based on category, type, financial institution, end-use, and country:

• Category Outlook (Revenue, USD Billion, 2017 - 2030)

  • Domestic

  • International

• Type Outlook (Revenue, USD Billion, 2017 - 2030)

  • Recourse

  • Non-Recourse

• Financial Institutions Outlook (Revenue, USD Billion, 2017 - 2030)

  • Banks

  • Non-banking financial institutions

• End-use Outlook (Revenue, USD Billion, 2017 - 2030)

  • Manufacturing

  • Transport & Logistics

  • Information Technology

  • Healthcare

  • Construction

  • Others

• Country Outlook (Revenue, USD Billion, 2017 - 2030)

  • China

  • Japan

  • India

  • South Korea